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O-LevelAccountingVerification of accounting records7707/21 · May/June 2024 · Q220 Marks

Paul is a trader. He maintains a three-column cash book. Paul has prepared draft financial statements for the year ended 31 March 2024. Paul later discovered the following five errors in his accounting records for the year ended 31 March 2024. 1 A purchase invoice, $140, had been debited to the account for office equipment. 2 Cash discount received, $18, had been recorded in the bank payments column of the cash book. 3 Carriage inwards, $82, had been credited to the carriage outwards account. 4 A payment for insurance, $375, had been debited to the bank account and credited to the insurance account. 5 The bank receipts column of the cash book for February 2024 had been undercast by $90.

  1. (a)Prepare the journal entries required to correct these five errors. Narratives are not required.[11]
  2. (b)Calculate the corrected bank balance at 31 March 2024.[4]
  3. (c)Calculate the corrected profit for the year ended 31 March 2024.[5]

Mark scheme

Marking points from the official mark scheme (May/June 2024). The mark or mark type is shown in brackets.

  1. [1] Error 1 Debit Purchases $140
  2. [1] Error 1 Credit Office equipment $140
  3. [1] Error 2 Debit Bank $18
  4. [1] Error 2 Credit Discount received $18
  5. [1] Error 3 Debit Carriage inwards $82
  6. [1] Error 3 Credit Carriage outwards $82
  7. [1] Error 3 Debit Suspense $164
  8. [1] Error 4 Debit Insurance $750
  9. [1] Error 4 Credit Bank $750
  10. [1] Error 5 Debit Bank $90
  11. [1] Error 5 Credit Suspense $90
  12. [1] Original cash at bank balance per draft financial statements $3290
  13. [1] Error 2: Add $18
  14. [1] Error 4: Less $750
  15. [1] Error 5: Add $90
  16. [1] Bank balance after correcting errors $2648 (OF)
  17. [1] Original profit for the year per draft financial statements $9268
  18. [1] Error 1: Less $140
  19. [1] Error 2: Add $18
  20. [1] Error 3: Less $164 (82 × 2)
  21. [1] Error 4: Less $750
  22. [1] Profit for the year after correcting errors $8232 (OF)

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About this question

Topic
Verification of accounting records, O-Level Accounting (syllabus 7707). Structured question, 20 marks.
Source
O-Level Accounting, May/June 2024 Paper 2 Variant 1, question 2.

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